It began as a salacious story about the less edifying side of journalism - part seedy soap opera and part real-life tabloid tale. But the saga of Page Six, the infamous gossip column in Rupert Murdoch's New York Post, could end up tarnishing some towering reputations, and deliver some lessons about what can happen when journalistic power is left unchecked.

The episode began last year, when Page Six writer Jared Paul Stern was suspended over allegations he had blackmailed Californian billionaire Ron Burkle. Burkle claimed Stern had threatened to publish revelations about him unless he paid him $220,000, a sum he refused to hand over.

Some months later, after Stern was exonerated by the Post but not reinstated, he sued for unfair dismissal. Stern's lawyers sought affidavits from former colleagues, including another ex-Page Six man, Ian Spiegelman.

Spiegelman made a series of allegations about activities at the paper that make the claims about Stern seem trivial by comparison. They include suggestions that Page Six editor Richard Johnson took money from a Manhattan restaurant in exchange for regularly plugging it in his column, and allegations that Post editor-in-chief Col Allan accepted sexual favours from dancers at Scores Strip Club. Allan denies any impropriety.

But the most surprising aspect is that Spiegelman's claims might never have been made public if the New York Post hadn't published them in full itself - on Page Six. The paper, which was run by the News of the World's Colin Myler until his recall to London earlier this year, went public in an attempt to discredit Stern and Spiegelman. But it was forced to concede that Johnson had taken cash, describing that as a 'grave mistake'.

Rivals were shocked to see the Post, a notoriously combative title, publish a mea culpa, of sorts, on Page Six, which is compulsory reading for Manhattan's media and showbiz elite. The move may yet backfire spectacularly. Others are now investigating the conduct of Johnson and his colleagues, and shedding light on the behaviour of some bigger personalities in the process.

Johnson is accused of begging a favour two years ago from Hillary Clinton, the Presidential candidate and former first lady who is also a New York senator, after he found it difficult to get a passport. Without it, he would have been unable to cover a party being thrown by Sean 'P Diddy' Combs in France, so he contacted Clinton for help. Howard Rubenstein, the veteran New York PR man who has represented Murdoch for decades, concedes Johnson did call Clinton, telling the New York Observer that he 'found the bureaucracy delaying his passport, and he appealed to Clinton's staff for help, as any constituent would. And he secured, in a legal and proper way, a passport that he was entitled to.'

Perhaps, but others claim that the incident illustrates the strength of the bond between Murdoch and the Clintons, who had a frosty relationship that began to thaw around the time Johnson made his request. Spiegelman's affidavit details a tour of the Post's offices Murdoch gave Bill Clinton, during which the former President joked with Page Six staff. It goes on to allege that 'politicians such as Hillary Clinton and others in a position to grant Murdoch and News Corp valuable concessions and favours were... fellated in print', and, later, that 'Page Six was ordered to kill unflattering stories about Hillary and Bill on numerous occasions'.

Spiegelman's statement provides few details, but Stern has claimed that a story about Edward Klein's eagerly anticipated book The Truth About Hillary was 'reconfigured' by Johnson, who turned a scoop about the book's explosive revelations into a piece that portrayed it as an inaccurate hatchet job.

Such decision are routine at newspapers, which are free to support whichever political figures they like. Murdoch's cosy relationship with Hillary Clinton has been an open secret since he hosted a fundraising dinner for her last summer; the number of negative stories about the Clintons subsequently fell dramatically. But the interest in Murdoch's methods is intense enough to cause the mogul a headache at an acutely sensitive time.

He is trying to buy Wall Street Journal owner Dow Jones, and persuade the Bancroft family that controls it of his impeccable credentials as a proprietor. Any suggestion that he regularly intervenes in editorial matters will not help his case. Several prominent Journal reporters, past and present, have already written to the Bancrofts claiming that Murdoch is willing to place his commercial interests above editorial independence, citing as proof his decision to pull the BBC from his Chinese TV platform.

Murdoch has always denied those claims, but if the Page Six saga supplies his critics with more ammunition, it could prove far more damaging than even the most scandalous allegations about his journalists' behaviour.